charging extra for electricity and water connections and provision for piped gas.
Maintenance: Developers are charging maintenance fee for one to two years in advance, even before possession. The estimated maintenance cost for a high rise project in a metro city would range from Rs 10-20 per sq ft per month, inclusive of all taxes and society charges levied on monthly basis.
Miscellaneous: There are developers who charge entrance fee, common amenity expense, deposit against possible damage during interior works, premium for the flat located in a particular direction, preference as per Vaastu etc. All this will also attract taxes. One can add about Rs 1 lakh for the same.
TAXES: The major taxes are stamp duty (5 per cent), registration cost (1 per cent), VAT (1 per cent), and service tax. Usually they account for 8-10 per cent of the basic cost.
The schedule of payment is usually tilted in favour of the developer. In most cases, hardly 5-10 per cent is left as balance, paid on possession. Almost 90-95 per cent of the cost is paid in two-three years while possession is scheduled not before five years. Since the buyer pays almost everything and gets no returns, he loses interest on this money. This should be added to the total cost.
On an average about 40 per cent of the total cost is paid during the first year after booking, 30 per cent in the second year, and 20 per cent in the third year. (See table). Consider the delivery time as five years and an average interest rate of 9 per cent. One must calculate the interest cost of the first tranche for five years, the next tranche for four years and the third tranche for three years. This is simple interest that adds to the cost.
As we saw, the flat that was quoted at Rs 3.10 crore turned out to be Rs 3.87 crore. After factoring the interest cost it ballooned to Rs 5.09 crore. This calculation has been done without considering a home loan, which if done, would bloat the cost further. “One